MCD

By Will Feuer

The Securities and Exchange Commission said it has charged Stephen Easterbrook, the former chief executive of McDonald's Corp., with making false statements to investors about the circumstances leading to his firing in 2019.

The SEC also charged McDonald's for shortcomings in its public disclosures related to Mr. Easterbrook's separation agreement with the company.

Without admitting or denying the SEC's findings, Mr. Easterbrook entered into a cease-and-desist order, which bars him from serving as an officer or director for five years. He also agreed to pay a $400,000 civil penalty, the SEC said.

McDonald's fired Mr. Easterbrook in 2019 for violating company policy by having an inappropriate relationship with an employee, the SEC said. But Mr. Easterbrook's separation agreement said his termination was without cause, which allowed him to retain substantial stock-based compensation that otherwise would have been forfeited, according to the SEC.

"In making this conclusion, McDonald's exercised discretion that was not disclosed to investors," the agency said.

Then, in July 2020, an internal investigation by McDonald's revealed that Mr. Easterbrook had engaged in other undisclosed, improper relationships with additional McDonald's employees, the SEC said. Mr. Easterbrook knew or was reckless in not knowing that his failure to disclose these additional violations of company policy prior to his firing would have influenced McDonald's disclosures to investors related to his departure and compensation, according to the SEC.

"When corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders, who are entitled to transparency and fair dealing from executives," said Gurbir Grewal, director of the SEC's Division of Enforcement.

"By allegedly concealing the extent of his misconduct during the company's internal investigation, Easterbrook broke that trust with--and ultimately misled--shareholders," Mr. Grewal said.

McDonald's sued Mr. Easterbrook over his compensation in August 2020, alleging that he lied to the board about sexual relationships with employees before his ouster. In December 2021, Mr. Easterbrook agreed to return compensation that was valued at more than $105 million to McDoanld's to settle the dispute.

Write to Will Feuer at Will.Feuer@wsj.com

(END) Dow Jones Newswires

January 09, 2023 09:38 ET (14:38 GMT)

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